Insolvency and Bankruptcy Code (Amendment) Bill 2026: Key Changes, Features & Impact on Insolvency Resolution

Recently, The Parliament passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2026.

• As of December 2025, IBC has facilitated the resolution of 1,376 companies, helping creditors to recover 4.11 lakh crore. 
  • Financial creditors have seen recovery exceeding 34% of their claims.

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About Insolvency and Bankruptcy Code (Amendment) Bill, 2026

• The Insolvency and Bankruptcy Code (Amendment) Bill, 2026 seeks to strengthen India’s insolvency framework by streamlining processes, reducing delays, and enhancing creditor-driven resolution.
• It also aims to improve ease of doing business by increasing efficiency, transparency, and predictability in insolvency proceedings.

Key Features

• Delay in Admission of Insolvency Applications: The National Company Law Tribunal (NCLT) is mandated to admit insolvency applications within 14 days, but delays often extend to several months. 
  • The proposed amendment aims to streamline this initial stage to ensure timely initiation of insolvency proceedings.
• Mandatory Admission of Insolvency Applications: The National Company Law Tribunal (NCLT) must admit insolvency applications once default is proven, subject only to procedural compliance and absence of disciplinary proceedings against the resolution professional. 
  • The Bill bars rejection on any other grounds, reducing discretion and expediting the process.
• Creditor-initiated Insolvency Resolution Process (CIIRP): Creditor-initiated Insolvency Resolution Process (CIIRP) has been introduced that provides for an out-of-court initiation mechanism which can be done by only “specified financial creditors”.
  • At least 51% of financial creditors will have to agree to initiate this process.
• Framework for Group and Cross-border Insolvency: The Bill also introduces a framework for group insolvency and cross-border insolvency, aimed at improving investor confidence and aligning domestic processes with international best practices.
• Removing Conflict of Interest: It proposed removing conflicts of interest by disallowing the resolution professional (RP) of a corporate debtor from becoming the liquidator.
• Stipulated Timeline: It recommended a three-month timeline for the National Company Law Appellate Tribunal (NCLAT) to reduce “undue appellate delays”

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• Broadening Term “Corporate Debtor”: It recommended adding an explanation to Section 240C to clarify and broaden the term “corporate debtor” to explicitly include any person incorporated with limited liability outside India.
• Reforms in PPIRP Voting: It recommended lowering the voting threshold for pre-packaged insolvency resolution process (PPIRP) to 51%.
  • Further it empowers Insolvency and Bankruptcy Board of India (IBBI) to set timelines and conduct standards for the Committee of Creditors.
• Shift from Criminal to Civil Penalties: It replaces criminal penalties with civil penalties for offences such as contravention of moratorium or resolution plan and non-disclosure of dispute or payment of debt by operational creditor.

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